Australia: Case Round-Up - A Summary Of Some Of The Recent Cases Of Interest.

Last Updated: 17 October 2008

Employment - mutual trust and confidence

McDonald v State of South Australia [2008] SASC 134

The Supreme Court of South Australia has awarded a former teacher $400,000 after finding that the South Australian Department of Education and Children's Services (DECS) breached its implied duty of mutual trust and confidence.

The teacher involved in the case taught subjects in business studies and economics but was also asked to take on a role involving network management of computer systems (for which he was not qualified). It was alleged the teacher's complaints that the long hours he spent juggling his various roles was causing him stress and detrimentally affecting his health, were inadequately handled by DECS. The teacher resigned in 2003 as a result of working under such pressures.

The Court found that the teacher:

'was clearly working under pressure yet neither the school nor DECS attempted to manage a potentially risky situation regarding the health and welfare of [the teacher]...Looking at the conduct of DECS as a whole, and judged reasonably and sensibly, the combined effect is such that [the teacher] cannot have been expected to put up with it'.

The Court ruled that DECS had breached its contractual duty of care to provide a safe system of work by not clearly identifying the teacher's roles and by failing to inform other employees not to ask the teacher to resolve their IT issues.

The relationship of mutual trust was found to have begun to break down when new IT employees were hired to replace the existing ones (who were dismissed) without the teacher's knowledge. The Court found that the school was particularly 'sinister' in appointing new staff to take over portions of the teacher's network management role without his consultation, and this amounted to an act of victimisation and harassment. Ultimately, the Court stated that the teacher 'was truly left to his own devices', and 'the job which he found himself doing was much different and much more onerous than the one he had applied for'.

The Court held that the teacher's resignation was in fact constructive dismissal resulting from an irretrievable breakdown of the employment relationship.

This judgment highlights the fact that employers must be mindful of what tasks they hire employees for and must show some compassion and understanding when addressing concerns of employees.

Industrial Relations - section 496 developments

Cadbury Schweppes Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2008] AIRC 1098

The Australian Industrial Relations Commission (AIRC) has dismissed an application under subsection 496(1) of the Workplace Relations Act 1996 (Cth) holding that a three-day strike comprising 18 successive four-hour stoppages was authorised by a protected action ballot and, therefore, protected action.

In February 2008, the Australian Electoral Commission declared the results of a union ballot approving industrial action 'in the form of bans, stoppages of the performance of all work for four hours, stoppages of the performance of all work for 24 hours and indefinite stoppage of the performance of all work'. The union subsequently issued 'Notices of Intention to Take Protected Industrial Action' in the form of six consecutive four-hour stoppages over five days. Ultimately, 18 successive four-hour stoppages over 72 hours were undertaken.

Cadbury Schweppes argued that the notices were 'technically drafted in terms of sequential four-hour stoppages but the actual effect [was] a 72-hour...stoppage'. Therefore, the action was not protected.

In dismissing the application the AIRC said that:

'There is nothing in the question authorised by the protected action ballot which prevents multiple consecutive actions of the type authorised...The authorisation specifically mentioned multiple actions by use of the plural reference to stoppages. In my view there was no requirement to specifically refer to the prospect of those stoppages being consecutive.'

Consequently, 'the description of their combined effect does not alter their character of consecutive four-hour stoppages'.

Employment - underpayment

Smith v A-Mart All Sports Pty Ltd [2008] FMCA 592

The Federal Magistrates Court has fined the major retailer A-Mart All Sports, $52,800 for failing to provide the statutorily required basic period rates of pay, and casual loading amounts.

A-Mart All Sports was found to have underpaid 44 employees throughout 2006 by requiring them to work between 15 and 30 minutes both before and after their regulated shift hours, but not paying for the extra time. This practice was so embedded in the company's culture that it even dismissed one of its managers for refusing to work the unpaid hours.

The Court emphasised that the actions warranted a severe penalty constituting 90% of the maximum amount allowable for the relevant breaches and the underpayments deserved the 'utmost condemnation'. The unpaid work requirement 'was not on any view an attractive work culture'. The Court commented that 'making people work for nothing is outrageous and totally at odds with acceptable behaviour'.

The Court ultimately reduced the penalty by another 10% as A-Mart All Sports showed remorse and did not implement the practice, but continued to apply it after taking over the business from a previous company.

Safety - drug testing

Shell Refining (Australia) Pty Ltd, Clyde Refinery v CFMEU [2008] AIRC 510 (25 August 2008)

The AIRC has resolved a dispute over random drug testing by requiring the employer, Shell Refining to use oral fluid testing rather than urine sampling at its refinery and terminal. An issue between the parties was whether it was unjust or unreasonable for Shell Refining to implement a urine based random testing regime when an alternative was available.

The AIRC decision is important as it considered the appropriate testing procedures for random drug testing. An important influencing factor was that urine sampling was considered to invade an employees' privacy more than the alternative method.

However, before requiring Shell Refining to implement the oral fluid testing regime the AIRC first requires two critical issues to be overcome. First, Shell Refining could not be expected to implement its system until an Australian laboratory was accredited for oral fluid testing under the relevant standard. And secondly, as there are drugs (such as benzodiazepines) for which the relevant standard did not contain target concentration levels, Shell Refining was not required to implement an oral fluids based regime until it had the agreement of the union and the laboratory it would use for drug testing, as to what are the appropriate target concentration levels.

Senior Deputy President Hamberger noted that the Western Australian Industrial Relations Commission in Court Session in the BHP Iron Ore Case had found that random testing using urine samples was justified on safety grounds, but said that the case was 10 years old and since then oral fluid testing had become available and an Australian standard developed.

In another issue before the AIRC, Shell Refining's revised policy also stated that its contractors were expected to adopt drug and alcohol policies consistent with Shell Refining's, and that the contractors' employees who performed high and medium risk activities could be subject to the same conditions for testing as Shell workers. The AIRC said it did not seem 'unreasonable' that the company implement this progressively.

Safety and discrimination - managing both obligations

Brunsch v Venture Mold and Engineering Australia Pty Ltd [2008] VCAT 920

This recent Victorian decision confirms the view that courts and tribunals are reluctant to allow employers to use occupational health and safety legislation obligations as a shield against compliance with other legal obligations such as anti-discrimination.

In this case the employee suffered an injury at work and was placed on restricted duties. The employee then suffered another injury outside the workplace. The latter injury prevented him from undertaking his restricted duties. During the period the employee was absent from work, a restructure was announced giving employees the opportunity to transfer to another site across town or receive a redundancy package. The injured employee was not made aware of this change or the options before employees. Some time after the close of his plant the employee was once again certified fit for work, however his position no longer existed.

The employee claimed indirect discrimination on the grounds of impairment under the Equal Opportunity Act 1995 (Vic). The employee's claim was that to be offered a transfer or severance package, the employer imposed the requirement that a person must be performing work at the relevant time or be 100% fit and able to work at the time.

Responding to this claim the employer argued that if it did discriminate then it was permitted by section 69 of the Equal Opportunity Act 1995 (Vic), which permits discrimination where it is necessary to comply with other laws. The employer claimed its actions were in compliance with its obligations to maintain a safe working environment under the Occupational Health and Safety Act 2004 (Vic). The employer explained that it had no roles at the new site for an employee on restricted duties and to offer a position would be dangerous.

The Tribunal rejected this argument. The Tribunal explained that an employer's safety obligations were not to be viewed in such a constrained or artificial way. An employer's safety obligations were to be afforded to each and every employee, irrespective of whether an employee was on WorkCover benefits or not. The employer was required to provide the employee with a choice between a transfer or a severance package.

Employment - serving out notice

Griffith University v Leiminer [2008] FMCA 1045

In this case, the employer, Griffith University, prosecuted a former employee for breaching section 719(1) of the Workplace Relations Act 1996 (Cth) by giving seven weeks and one day's notice, when under the University's collective agreement, she was required to provide six months notice . The Federal Magistrate found that the employee had deliberately breached the notice period under the collective agreement but that her conduct was based on erroneous advice from the union and was not malicious.

Griffith University had argued that it had suffered a loss of about $22,700 in extra teaching costs but the Court said that this was more than offset by the estimated $38,000 that it would have had to pay the employee if she had worked out the full notice period. As a result, the Court decided that a penalty of $500, to be imposed on the employee, was appropriate in the circumstances.

It is rare for employers to commence claims against former employees and this case highlights some of the difficulties associated with it. However, this case also proves that it is possible for employers to successfully pursue employees who fail to abide by the terms of their employment contracts and could provide some useful leverage for employers when confronted with an employee who is threatening to not work their notice period.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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